Check My Work (4 remainin eBook Video distributed across funds with a standard T
ID: 3340349 • Letter: C
Question
Check My Work (4 remainin eBook Video distributed across funds with a standard The average return for large-cap domestic stock funds over the three years 2009-2011 was 14.1%. Assume the three-year returns were normally deviation of 4.996. Use Table 1 in Appendix 8. probability an individual large-cap domestic stock fund had a three-year return of at least 20% (to 4 decimals)? b. what is the probability an individual large cap domestic stock fund had a three-year return of 10% or less (to 4 decimals)? c. How big does the return have to be to put a domestic stock fund in the top 10% for the three-year period (to 2 decimals)? Hide Feedback Incorreet Check My Work (4 rema e here to searchExplanation / Answer
a) P(At least 20%)
= P(z > (20 - 14.1)/4.9)
= P(z > 1.20)
= 0.1143
b) P(10% or less)
= P(z < (10 - 14.1)/4.9)
= P(z < -0.84)
= 0.2014
c) z score for top 10% = 1.28
Hence,
Retun = 14.1 + 1.28(4.9) = 20.38 %